Wednesday, September 22, 2010

Quotes of the day

Goldman, like other firms, has codified policies on how the sexes should handle conflicts: in the cases of both dating and sexual harassment, incidents and entanglements have to be reported to the boss.--Heidi Moore

... Bretton James [Josh Brolin's character in Wall Street: Money Never Sleeps] is based a bit on Robert Rubin, who’s really enriched himself. I think he’s the richest ex-Secretary of the Treasury ever. There’s also a bit of Jamie Dimon in him. And if Lloyd Blankfein were handsomer, you could say he’s Josh Brolin.--Oliver Stone

For the longest [time], I was trying to understand when I was on the outside looking in. I always knew he was a great player but I never understood why he would always be out there every single game, doing what he’s done. To his credit, he works at it. He really, really works at it. Nobody in the league compares to him. He’s probably the No. 1 unsung hero across the entire NFL. He’s probably one of the most underrated guys. He’s the best at what he does.--Fred Taylor

Kevin will come back from it. He’s come back from everything in his life. Kevin’s a fighter. He’s a warrior. It’s just about hard work, that’s all it is. Kev will do that.--Tom Brady

The optimal policy is a negative inheritance tax. At age 65 both rich guys should be forced to put some amount (let’s say $100,000) into a government fund. When they die, the $200,000 should go to the kid who also inherited the rich guy’s money. I know what you are thinking—why not give the $200,000 to the poor? Because we already assumed the existence of a progressive payroll (or consumption) tax, which is redistributing the optimal amount of money to the poor. This extra tax is just trying to make things a bit more equal among two old rich guys, and one worthless trust fund baby. [Yes, I'm sort of joking here---just trying to rigorously apply the logic of egalitarianism. (For my trust-fund kid readers--I have nothing against you, I am just parroting society's prejudices.) But I am serious about favoring a progressive consumption tax. Indeed I favor it so much that I would prefer it even if it meant I paid more in taxes than I do right now. You will never find me complaining that I can't get by on a family income of over $250,000.] I think people have a huge mental block about these ideas, because they grossly misunderstand the actual incidence of taxes. For instance, most people think consumption is much more equal than income, and hence that consumption taxes are regressive. Actually, consumption taxes are proportional to consumption, which is the only meaningful benchmark. Income is meaningless gobbledygook. And most people think wealth is much less equal than income. But how can both of these perceptions be correct, when wealth is nothing more than the present value of all future consumption for you and your heirs! Actually, inequality of wealth and consumption are exactly equal, when properly measured in present value terms.--Scott Sumner

Would Larry [Summers] have been rehired by Harvard if he resigned and stayed another couple of years in Washington? Unclear. The pro case for rehiring would be that Larry is one of the smartest guys around and has a great deal of fascinating experience to share with students. The con case would be that he has been out of the academic research game for quite a while and that in a time of reduced financial resources, faculty slots should be devoted to younger scholars rather than potentially extinct volcanoes. Ironically, if Larry were on the faculty voting on this matter, the con case is the kind of argument he might have made.--Greg Mankiw

But while Summers emerged from the Asian crisis with a reputation as a crisis fighter, this time around has proven more challenging. As traders say, "In a bull market, everyone's a genius." Summers and Rubin basked in the reflected glory of the tech boom, with full employment and full government coffers. The events of the last two years have tarnished both Summers and Rubin, as it turned out that even their formidable skills could not produce growth out of nothing. No doubt some will say this is unfair--that of course Summers couldn't cope with a crisis handed to him by Bush. But to the extent that you think that the financial crisis was largely a matter of regulatory failures--a position I actually find pretty unconvincing--the regulatory failures were at least as much due to Clinton policy as to the Bush team. In fact, I continue to think that Summers is a brilliant man who probably got undue credit for the charms of the tech boom, and will be criticized unfairly for the strictures of the current crisis. But that's politics; if you're happy to accept the unfair accolades, you have to be willing to endure the unfair brickbats as well.--Megan McArdle